News analysis

E-wallets finally on their way to gaining widespread acceptance?

Launch of Apple Pay - followed by Samsung Pay soon - seen galvanising payment service

E-wallets may finally gain widespread legitimacy now that Apple and Samsung are joining the move to replace consumers' physical wallets.

The bank cards covered may be limited for now, but analysts and market observers believe the two tech giants could be the ones to persuade people that it is safe and acceptable to pay for goods by tapping their phones at payment counters.

"Given time, Apple Pay and Samsung Pay will have a much better chance at succeeding than past implementations in Singapore," said Ms Quah Mei Lee, market research firm Frost & Sullivan's Asia-Pacific industry principal (digital transformation).

Apple Pay, launched here on Tuesday, allows credit and debit cards issued by American Express (Amex) to be saved onto Apple's mobile devices for payment use. Visa credit and debit cards issued by DBS, United Overseas Bank and Standard Chartered will be supported in the coming months.

Samsung Pay will launch in Singapore by June. It will allow customers holding Visa and MasterCard credit or debit cards issued by DBS/POSB, OCBC and Standard Chartered to tap their Samsung phones to pay.

The bank cards covered may be limited for now, but analysts and market observers believe the two tech giants could be the ones to persuade people that it is safe... to pay for goods by tapping their phones at payment counters.

Like the ez-link stored value cards, both payment services use wireless near-field communication (NFC) technology to transmit data between the mobile device and a contactless reader. Payment information, including card details saved to the mobile device, is transmitted when the device is placed near the reader.

Ms Quah said the launch of Apple Pay - and soon, Samsung Pay - signals the first time consumers here can save their existing credit or debit card details to the phone for payment at physical stores.

The timing is right too. A similar contactless card initiative rolled out by Visa known as Visa payWave has accounted for over one-third of all Visa credit and debit card transactions in Singapore at brick-and-mortar stores.

Visa payWave still relies on the tapping of plastic cards on contactless readers to pay for goods, rather than digitised in an e-wallet stored in a phone.

Ms Ooi Huey Tyng, country manager for Visa Singapore and Brunei, said there is potential in mobile payment.

Previous NFC payment efforts led by the Infocomm Development Authority needed consumers to apply for a new virtual credit card, like the DBS One.Tap, which had to be saved in telcos' e-wallets. Interest was lukewarm, and One.Tap was discontinued last September. "People want to use their credit cards to earn loyalty points," said Ms Quah.

Being bank neutral, Apple Pay and Samsung Pay are poised to enable more users of mobile payment. "This helps users overcome the silos between specific banking apps and e-wallets," said Mr Clement Teo, a senior analyst at market research firm Forrester.

For instance, the UOB Mighty e-wallet app - which lets Android smartphone users tap their phones at NFC contactless readers to pay for goods - saves the details of only UOB cards.

Other banks like DBS and OCBC also have their own apps, but they are mainly for online transactions and mobile fund transfers.

The tighter security without the inconvenience of having to remember passwords with both Apple Pay and Samsung Pay is said to be a boost. Users need to place their fingers on the mobile device's fingerprint sensor to authenticate a transaction. And there is a $100 cap on every transaction.

Senior software engineering manager Tang Weng Sing, 44, said: "I think it is more secure than using the plastic credit card, which no one checks against for the cardholder's signature anymore."

Even if users lose their phones, the security of their plastic cards is not compromised. This is because the 16-digit number on the card is not saved on the phone. What is stored instead is the encrypted version of a unique digital identifier, created based on the actual credit card number.

If a user should lose a phone, there is no need to call a bank to deactivate a card. He just needs to turn on "Lost Mode" under "Find My iPhone" in the iCloud account to deactivate Apple Pay.

Mr Charles Reed Anderson, market research firm IDC's Asia-Pacific vice-president of mobility and the Internet of Things, said Apple and Samsung - by virtue of their market dominance in Singapore - have a high chance of succeeding with their e-wallets, when all banks come on board. "If Amex and DBS, UOB and Standard Chartered see adoption, the others will want to jump on board."

A version of this article appeared in the print edition of The Straits Times on April 21, 2016, with the headline 'E-wallets finally on their way to gaining widespread acceptance?'. Subscribe